70% of people want free face-to-face advice when they retire
Around seven out of ten retirement savers would prefer to receive face to face advice when the government's free pensions advice service is introduced in April 2015.
While 69% of savers would prefer the personal touch when it comes to discussing their retirement income options, just 3% of people would prefer a purely online advice service, according to Consumer Intelligence research.
It also shows that people would be willing, on average, to travel a total of 11.4 miles to receive face to face advice.
Instead, they will be able to take the whole lot as cash (subject to a tax charge equivalent to their marginal rate of tax), leave it invested, or purchase an annuity - although a recent Moneywise.co.uk poll of 1,000 people indicates that just 7% of people will still purchase an annuity once the changes take effect next year.
The government also announced that everyone who retires with a DC pension will be offered "free and impartial" face-to-face guidance at the point of retirement.
Consumer Intelligence says just 8% of people will be happy to travel more than 25 miles to receive this advice.
Its findings also indicate that only 5% plan to blow all their pension money and rely solely on the State for their income in retirement; 44% of those with a pension pot of £30,000 will use it all to provide retirement income whereas only 14% of those with a fund of £250,000 would do so.
Making income last
David Black of Consumer Intelligence said: "Decisions about retirement income are ones that people literally have to live with so it is clear that people want to take them seriously.
"Face to face guidance is by far the preferred option for the free advice proposed by the government with most people willing to travel to ensure they get as much help exploring their options as possible.
"However, it does appear that claims about people blowing all their cash on Lamborghinis are not going to come true. Most people realise that they will be retired for a long time and that they will need to ensure that they have enough income to last."
Defined contribution pension
Often referred to as a “money purchase” scheme, although offered by employers (who may pay a contribution) these pensions are more likely to be free-standing schemes that a person contributes to regardless of where they are employed. Here, the level of benefit is solely dependent on the accumulated value of the contributions and their performance as investments. Therefore, the scheme member is shouldering the risk of their pension, as the scheme will only pay a pension based on the contributions and investment performance. The final pension (minus an optional 25% that can be taken as tax-free cash) is then commonly used to purchase an annuity that would provide an income for life.
In exchange for any lump sum – usually your pension fund – an annuity is “bought” from an insurance company and provides an income for life. When you die, the income stops. Annuity rates fluctuate daily and depend on your sex (although from 21 December 2012 insurers will no longer be able to use gender as a factor when calculating annuities), age, health and a number of other factors, so you have to pick the right one and, once bought, its terms cannot be altered, so seek financial advice.